1

Albrecht Kaupp, ManagerIndo-German Energy Programme, IGEN,

DSM, energy modesty, energy efficiency and energy intensity

Demystified ?

2

Demand Side Management, DSM

Original definition coined 1972 by Gelling, EPRI, USA.

“The planning and implementation of those utility activities designed to influence customer use of electricity in ways that will produce desired changes in the utility’s load shape”.

3

History of DSM

DSM was promoted by over 2000 DSM programmes of about 1000 utilities in the USA between 1973 and 1998. After deregulation of the power sector in the USA, most DSM programmes collapsed and about 40 programmes were left in 1999.

Utilities in Germany and Japan never bothered about national DSM programmes.

4

Power utility intention behind DSM

Cut the “kW-load peaks” and fill up the “kW-load valleys” without reducing kWh electricity consumption of well paying customers, since they are a source of profit for a power utility.

Electricity savings (kWh) was a side effect of DSM but never the objective.

5

DSM makes only sense for a power utility, if

• DSM is applied to all non paying or below delivery cost paying customers, or

• DSM activities strictly reduce peak load without cutting into revenues from well paying customers.

6

No win-win situationA professional consulting firm offering services to an industrial customers to reduce electricity costs is not in the interest of a power utility.

Why?

The consulting firm gets only business from industry/ commerce that pay high power tariffs and do not steal power.

In other words a professional energy auditor will always cut into the profit of a power utility.

7

Sharing of global responsibilities !

Energy efficiency and energy modesty is not any longer a national issue.

It is a global responsibility of every country to practice energy modesty in particular industrialised and highly urbanised consumer societies.

8

Energy Conservation Day 14th December 2004

“We cannot blindly ape the west and pursue a highly resource intensive development or for that matter, resource intensive consumption patterns.

We must be under no illusion that we can in fact approximate consumption levels as we see them in the affluent western society. Indeed, in the interest of humanity and the sustainability of our life support system on this planet, it is the West that must bring its energy consumption level closer to ours rather than the other way round”.

Honourable Prime Minister of India

9

Per capita electricity consumption is the best indicator of “quality of life”

Check for excessive consumption despite high energy efficiency

Electricity consumption per capita (kWh)

10

Energy intensity (TOE/ GDP)Energy intensity is a good indicator of the development stage of a country in terms of

(i) Industrialisation

(ii) Urbanisation

(iii) Electrification

(iv) Consumerism

(v) Saturation of market for electrical appliances and cars

However it is a poor and perhaps irrelevant indicator to judge the “energy efficiency and energy modesty” of a nation. High energy intensities had been the past trademark of development of today’s highly industrialised countries and are therefore not so unusual for emerging economics.

11

How important is energy efficiency for the power sector

1. Non-paying customer # 1 the “T+D system” at speculatively estimated 10% - 25% technical loss.

2. Non-paying customer # 2 “station use” at speculative 8% loss. In other words two large consumers, Mr. Station loss and Mrs. T+D loss may consume > 25% and don’t pay for it.

3. Add to this the fuel energy loss of power generation at a average national power plant efficiency of 30.5%. The later figure however may be debatable.

12

Which plant efficiency do you fancy?

Lignite coal 3500 kCal/kg

GCV NCV

Net MWh 34.5 36.7

Gross MWh 38.3 40.8

Difference between GCV and NCV is 6.2%

13

Mapping software

How efficient are Indian power plants?

This may be the wrong question. It is better to ask how can we better establish and verify the present performance at the present configuration with the least effort.

14

Do you want energy efficiency for charity or aim for financial and

economic attractiveness?

There is always a most economic power plant efficiency based on fuel costs, expected IRR, technical life and plant load factor. The calculation principle is simple and based on the question.

“What premium could be paid for a plant if system efficiency is say better by 4% points” under the assumption that premium is recovered through fuel cost savings.

15

How much premium could be paid ?

Imax =(qn – 1) 8760 PLF CMWh (new - as is)

qn (q - 1) new as is

Imax =(1.1625 -1) 8760 500 (0.40 – 0.36)

1.1625 (0.16) 0.4 0.36= 0.74 Crore Rs/MW

16

Which are the important industries for energy efficiency and conservation

Order of magnitude rating# Sectors Criteria Ranking Sum

A B C

1. Thermal Power Station 1 2 1 4

2. Fertilizer 2 1 3 6

3. Cement 5 6 4 15

4. Iron & Steel 4 5 7 16

5. Chlor-Alkali 10 4 2 16

6. Aluminium 9 3 8 20

A = Total energy consumption in TOEB = Energy cost as percentage of total costC = Energy intensity “TOE/ Annual turnover”

17

Important impact check

Whatever policies, projects and programmes will be formulated and implemented in the power sector under the headings of energy efficiency, energy modesty or DSM asking the questions

“Does the measure help to decouple economic growth from growth in power consumption”

is a good way to start a discussion about the merit of the measure.

18

My equation for a global sustainable energy policy, GSEP

GSEP = energy modesty + energy efficiency + renewable energy

Exactly in this order of priority

19

Forcing more energy efficient electrical appliances into the market ! Which way to go?

Two major policy choices are

Choice 1: Believe in market forces and goodwill of a consumer. In other words believe in the existence of a well informed and cosmopolitan consumer who understands global energy supply and consumption issues and even acts rational by buying equipment with the lowest life cycle cost .

Choice 2: Remove the inefficient appliances from the market.

20

Electricity saving potentialEquipment Annual electricity

savings GWhOrganised sector

%

Industrial motors 1,231 98

Fluorescent tube lights 1,110 90

Agricultural pump sets 900 55

Refrigerators 695 100

Air conditioners 441 85

Ceiling & table fans 276 6

Industrial pumps 265 90

Ballasts 223 30

Industrial fans 218 85

Distribution transformers 202 50

Geysers (hot water) 147 ?

Compressors 79 95

CFLs (60W incandescent lamp) replacements 41 ?

Total 5,845

21

Relation between active material cost and efficiency in electric motors - 3 HP

0

200

400

600

800

1000

1200

1400

1600

1800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Motor 3hp

Ru

pe

es

60

65

70

75

80

85

Eff

icie

nc

y (

%)

Active material cost Efficiency

22

Thanking you